Remember when everybody wanted to be a Financial Advisor
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I completely agree with your point. As an FA a wholistic apporach is a neccessity and as of right now, I fill the role of a stock broker with an FA title. I am taking courses toward my CFP which are at least giving an idea of the financial planning process. But what I do not feel comfortable doing, I make sure to ask "experts" or at least people who know a lot more than me. I embrace the idea that I do not know everything but with more experience I am hoping to better serve my cleints.
The problem is the training. All of you have hit it on the head, this is an act now, think later industry and b/d's are licensing people and telling them to sell now, think about advising later. It's a sink or swim industry and while i'm all for weeding out bad seeds, non-producing/lazy FAs, there needs to be more of a apprenticeship mentality. With that type of model, new hires would be more successful in the long run because they will have a better understanding of the products they are selling. My two cents and no offense taken. I know i'm new and have more to learn.
You have to take some responsibility, too. The problem is, you're flying a very high powered shuttle and it takes a flight plan, and a heck of a lot of courage to think for yourself. The goal is to the place the shuttle in low earth orbit.
As for technical knowledge, just in time learning is better than just in case, so you are right to rely on help. You already have the necessary tools and training and resources.
This is about being smart, there are a few specific things you can do to take control, very quickly. This is the perfect time of the year, and the environment is ripe, but you have to execute. I have some ideas, and so do others here, we all know what to do.
It will involve selling some insurance, which is the single best way to leverage your GDC, fast. Management will be thrilled if you start producing insurance, and will likely give you the freedom to execute. This will be in the best interest of your clients, who are crying for a wholistic approach to personal financial security.
I'm not talking about annuities.
[quote=gethardgetraw]
ive been doing this for a couple years, and right out of the gates i said to myself... wow... why are there SO MANY ADVISORS. if you drastically cut the number of advisors, nationwide & firmwide, investors would be walking in the door. they'd return your phone calls. they'd actually follow up on the literature you sent out last week.
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There are so many advisors because there are very low barriers to entry. Two months study for a Series 7. A couple days for a Series 6.
Financial Advisors are sort of the opposite of Doctors. Doctors need first to get into Medical School, then eight more years of schooling after college. And the AMA limits the number of Doctors.
[quote=BigFirepower]
The worst I've seen in this biz, was in the late 90s, when I began to wonder if 7-11 wasn't about ready to start licensing their clerks.
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No joke - do you remember when Wall Mart was talking about selling mutual funds?
I guess the hiring practices aren't going to change, until the cost/benefit goes negative. Somehow, the average amount of new accounts and assets that failed brokers bring in, justify the costs. Trouble is, the consumer doesn't like it, and all parties would be better off with jr reps having the umbrella of a sr rep working the background. 3 yrs later, the jr rep gets to take off with a survivable amount of aum, and the sr can have a new jr.
This discussion about insurance... I have seen the push over all these years. Most insurance is sold abusively, and the customer knows even less about the product than the clueless rep. The big banks want 10% annual production from this area, devote typical half meeting times to the subject, and then get cute with payouts. They wonder why it fails.... Every major bank bd requires insurance licenses. I could write a term paper on this subject...
One of the inherent problems with our industry and the Sr./Jr. model is that currently most firms treat their FA's as if they own their business, so they can't "force" them to partner. Yes, it's often best for them, but you can't hire trainees "hoping" that some senior partner decides to bring them on, and you can't leave it up to the FA's to recruit their own, because it's simply not their job (unless they are really building a good internal practice).
That's why the wirehouses push partnerships so much, and firms like Jones push "Goodknights" so much. The dynamics of our industry are just not conducive to a perfectly linear growth model. It's like a shootin' range.
But I have always firmly believed that the industry should mandate a salaried apprentice period (say three years) like the CPA world. Until you complete that, you don't earn your stripes to conduct solo business. That would improve the retention, improve client service (more knowledgable advisors), and increase barriers to entry.
[quote=BigFirepower]
I guess the hiring practices aren't going to change, until the cost/benefit goes negative. Somehow, the average amount of new accounts and assets that failed brokers bring in, justify the costs. Trouble is, the consumer doesn't like it, and all parties would be better off with jr reps having the umbrella of a sr rep working the background. 3 yrs later, the jr rep gets to take off with a survivable amount of aum, and the sr can have a new jr.
This discussion about insurance... I have seen the push over all these years. Most insurance is sold abusively, and the customer knows even less about the product than the clueless rep. The big banks want 10% annual production from this area, devote typical half meeting times to the subject, and then get cute with payouts. They wonder why it fails.... Every major bank bd requires insurance licenses. I could write a term paper on this subject...
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This is a pretty broad brush and moves away from what I think is an important concept for newer FAs trying to survive. . Are you insurance licensed and do you sell or make recommendations on insurance?
Tenth, yes, I'm insurance licensed since 94. I've done term, annuity, and second to die estate planning cases in the past. Insurance is a portion of what a good FC provides their client, but I've seen more abuse in the area of insurance compared to the entire combined other element of what we do. I worked for a big bank that before they failed, was one of the largest annuity sellers in the nation. Again, I could literally write a book on the subject.
Most of the abuse I saw was from the annuity side of things, but I also saw later how those abusive annuity practices were being mined into opportunities to convert those funds into life policies. The second part, was to make up for the "mistake" of owning an annuity...
Again, I'm not saying that all insurance is bad, just that most folks doing it that I've seen, use it primarily for the generation of large tickets, a way to fuel their ambitions to be #1 at said firm, or the region they work in. Having now spent a fairly long time in this biz, and seeing the results from what these policies do, I'd say that most folks have been grossly overpromised and under delivered in the hands of retail insurance vendors.
Agreed.
Bull, what is your GDC payout percent on the sale of a disability income policy for a small business owner?
What % on sale of a long term care policy?
And what is the amount of GDC on the sale of $100,000 permanent insurance (not variable) to a 35 year old male? The amount that shows up in your pay check?
guess the hiring practices aren't going to change, until the cost/benefit goes negative. Somehow, the average amount of new accounts and assets that failed brokers bring in, justify the costs. Trouble is, the consumer doesn't like it, and all parties would be better off with jr reps having the umbrella of a sr rep working the background. 3 yrs later, the jr rep gets to take off with a survivable amount of aum, and the sr can have a new jr.
Competition is a beautiful thing. I think small independents like me are figuring out how to take some of their lunch. It has to do with teaching Jr. how to satisfy all of the clients needs, it is the new financial planning hybrid and it has little to do with big business, big overhead, and big egos. Competition is already taking the c/b negative, that's why wirehouses are going to teams, which is positive.
And wirehouses better figure out that things like personal, portable disability insurance and the right combination of portable term and permanent insurance, and long term care protection, don't stink as bad as they think, especially when you are learning the business.
Or they can just leave the door open for somebody else.
Tenth, as far as payouts go, you'll get a kick out of this. SP Life policies, were being paid out at 5% at the bank. I clearly knew that the GDSC was really 8% if not 10%. Later, after zippo results, they raised the payout from 5 to 7%. Our company put so much marketing and training support behind insurance, I joked that it was equivelent to a football coach creating the concept of winning by focusing on safeties.
Tenth, I am getting an idea of what you do, and I'm impressed. You sound like a real "thinker", and I like that. I'm sure the insurance stuff you do makes sense for all parties. You probably run circles around your immediate competition.
Tenth, I am getting an idea of what you do, and I'm impressed. You sound like a real "thinker", and I like that. I'm sure the insurance stuff you do makes sense for all parties. You probably run circles around your immediate competition.
Thanks, Big I'm going to be honest and say, I've gotten a bit fat and stupid and say, I'm taking an honest look at myself and getting fired up for fall. That answer your question, B?
Plus, I was ready to go RIA a couple of years ago, before the crash. Which one?
I have been giving insurance a run for it, before I give up the licenses. I like what I see.
As far as philosophy, I see the market forces bringing a confluence of some mighty fine factors that make it totally ironic that young people would be bailing the industry now.
And that young man better get back to me with the GDC numbers, otherwise I will mistake him thinking he is above doing what is right for his clients and himself.
I have so many ideas for you, Jr., you won't be able to implement them all.
Newby hint: what is the point of being a registered representative if you can't earn some reasonable commission up front? At least enough to pay back the training costs?
With regard to developing our book and talking to certain prospects, but also for yourself:
What is the most significant employment trend in America? (Self employment.) What is your most valuable asset? (Your ability to earn an income.)
What is the most important thing to you? (Get up every day and make a good effort, and know that as long as I make a good effort, my family will be okay.)
What is the biggest threat to your peace of mind every day? And so on.
You need to block out some time and bear down on insurance a little. You can still sell term, and build a meaningful program around your corporate employee clients.
If you are young, you need to mirror the real needs of your clients. That is called marketing.
Marketing is also blocking out some time to bear down on a little specific product knowledge, and planning specific time out of the office to match that solution to real needs.
The problem with our business is, we've all been trying to take shortcuts, and now that things are tough, it's no fun treading the beaten path like a deer to slaughter.
We have to increase our knowledge and value proposition, have more fun, and make more money. We could help each other here, and it is precisely because we are registered reps, most fully licensed up, that we can help each other have a renaissance of sorts. It can happen here.
Tenth, as far as payouts go, you'll get a kick out of this. SP Life policies, were being paid out at 5% at the bank. I clearly knew that the GDSC was really 8% if not 10%. Later, after zippo results, they raised the payout from 5 to 7%. Our company put so much marketing and training support behind insurance, I joked that it was equivelent to a football coach creating the concept of winning by focusing on safeties.
Speaking of football and NBA season, that focus and payout remind me of certain programs that were recruiting top talent and them letting them smoke pot and party all the time (building big facilities and bragging) - not walking the talk.
Other teams just bear down with good old fashioned discipline. If you get my drift ( pun intended).
My own take on the industry is, just like social security other entitlements (like government worker pensions, Jr. broker buyouts) - you have the boomers as me generation, and it is encumbent on the young people to cut through the smoke and find the path, not just step behind the guy in front of them. I would take on the right apprentice right now and pay a small stipend, but I'm not going to spend five hundred bucks to advertise that on the internet.
Bull, do the #s.
The minimum for any small insurance sale should be about $1000 in commission.
Assuming you don't want to sell A shares at breakpoint, ( who knows if A shares and C shares will be around in a few years) - a small insurance sale is equal at least to 100k in wrap in year one.
If you sell a policy, you get at least some cash assets, anyway.
Therefore, your minimum client size should be one small insurance sale, or $100,000 in Aum.
Either way, you need to penetrate the account, and that means you need to evaluate and seriously discuss all needs. You need to have high standards ( " I am very concerned that you are unwilling to protect your ability to earn an income or bonus, while the investing can be some fun, we need to take care of basics. What are your thoughts.")
( " You have six times salary coverage at work, and if you choose to leave your job or are laid off, you could keep that coverage but the premium will skyrocket. You will be forced to drop that coverage, unless you are really sick right when you leave your old job. We can buy $250,000 20 year term to give you some portable insurance, but you need something for when that runs out, because I can tell you from experience, that final day of your life that you are going to want permanent insurance is not going to fit neatly into that time frame. Here is the illustration and application for $250,000 of permanent insurance, not the hokey investment kind with high internal fees, but the kind that keeps a fixed value of cash and is designed to be permanent, not really as an investment vehicle."And so on.)
If you happen to make a few thousand bucks on insurance, and only move fifty k, that okay too. Since you're a real live broker, you can even start by talking about sexy investments, and move into the really important stuff that everybody loves to hate.
If you training sucks, you are doomed to fail. This is financial planning 101.
I am assuming the number of financial advisors has decreased over the last several years.
But so have the total assets being managed by advisors..
I would be curious if the ratio of assets divided by the # of financial advisor has increased or decreased? I'll bet there are more advisors on a per asset basis today than there were several years ago.
Agreed, but this is probably always the case. The same veteran brokers that have been in the biz 15-30 years just keep inheriting assets. I know several wirehouse brokers that are in their 60's that seem like knuckleheads and barely work, yet have $150mm+ in AUM. Right place, right time, and simply outlasting the other guys.